Construct · 1 fields · 2 citations

creative destruction: a standalone construct

One name. One construct. A landmark on the map.

● anchor · a standalone construct Nearest construct by meaninginnovationcompare the meanings
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creativedestruction1 CONSTRUCTCreative destructionSCHUMPETER · GALE

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Economics

The process by which innovation continuously destroys old economic structures and builds new ones

Joseph Schumpeter introduced creative destruction as an economic construct in his 1942 book Capitalism, Socialism and Democracy, calling it the essential fact about capitalism: the perennial process by which new products, methods, and firms continuously arise and, in doing so, dismantle the existing economic order they replace. He drew on earlier ideas, including the Marxian view of capitalism as a system in permanent upheaval and the German phrase schöpferische Zerstörung used by Werner Sombart in 1913, but Schumpeter is the one who made it a named mechanism of economic change. The construct describes growth as inseparable from disruption: the same innovation that creates new industries, jobs, and wealth also renders older technologies, skills, and companies obsolete, so decline is treated as a structural feature of progress rather than a failure of it. What makes creative destruction a landmark is its scope. It reframes competition not as static price-cutting among existing firms but as the arrival of the genuinely new, and it later anchored formal endogenous-growth models, most influentially Aghion and Howitt's 1992 model in which growth is generated precisely by innovators displacing incumbents.[1][2]

Unit
A macro-level process of economic change, observed across an industry or economy over time as innovation, entry, and exit
Recovery means
Not applicable
Measured by
Studied through firm entry and exit rates, job creation and destruction, productivity turnover, patenting, and displacement of incumbent technologies, and formalised in endogenous-growth models

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Nearby constructs

innovation6 fields · 11 citationsjingle · one name, six constructsdisruptive innovation3 names · 4 citationsjangle · one term, contested meaningsbook1 fields · 1 citationsanchor · a standalone construct

References

  1. Schumpeter, J. A. (1942). Capitalism, socialism and democracy. Harper & Brothers.
  2. Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323–351. https://doi.org/10.2307/2951599

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